Collective Bargaining and The Auto Strike
By Dr Gary K. Busch, Ocnus.net 22/9/23
Sep 23, 2023 - 6:50:40 AM
One of the most interesting aspects of the international and national coverage and debate about the current UAW strike is the deep and disturbing ignorance of the informed public about the nature and conduct of collective bargaining in the 20th and 21st century. This ignorance extends as well to the coverage of the Writers and Actors strike. The public debate reflects an almost childlike misapprehension of the state of industrial relations and the conduct of collective bargaining.
Collective bargaining, especially in the U.S., is a very sophisticated process with rules which have developed over a long period of time. It is not, as the press presents the debate as a bunch of radical unionists making expensive demands from their employer and standing in the way of progress by insisting on barriers to change. Collective bargaining is a system of industrial democracy in which both the employer and the employee benefit from the agreement on a contract. Each have demands which they make on the other side and the compromises made between them govern their relationship during the life of the contract. The employees gain job stability, a fair wage, safe working conditions, a path to promotion and a system of representation in disputes and the employer gets a stable workforce, an accurate projection his costs, and a grievance procedure which allows for adjustments to problems without the danger of a strike or slowdown. Both benefit.
I am not surprised at the hazy picture the public has about industrial relations as they are rarely part of anyone’s intellectual experience.
My introduction to the collective bargaining process started in 1964 when I was part of the team preparing for the automobile industry negotiations in Detroit. I was Research Director of the International Affairs department of the United Auto Workers Union (UAW) and was charged with examining the collective agreements made among General Motors, Ford and Chrysler unions around the world with the companies. I worked directly with Walter Reuther, the President of the union, and Nat Weinberg the Special Assistant to Reuther. I travelled to Switzerland, to the headquarters of the International Metalworkers Union to which we (UAW) were affiliated and did additional research there.
To prepare for the 1964 negotiations the union consulted its local unions across the U.S. and Canada to formulate its demands on a company basis. It then prepared a document for each of the companies which involved a great deal of information. The union had its own IBM computer in those days, and we knew exactly how many workers were employed in every plant and their seniority; what job classifications applied; the cost attributed to each job; the fringe benefits which applied; and the other costs (like parking, health, etc.).
Our demand was presented to the management and reflected the projected cost of the new contract to the employer based on the cost for each worker to the tenth of a cent per hour for the life of the contract. The union decided which aspects of the collective agreement it wished to change, and these were costed. We went first to General Motors and sat down at a long table; management on one side and the union on the other. Behind the negotiators were both union and management support teams. We had lawyers, actuaries, accountants in support as did the management. Both sides were patched in on live time to our own computers so that we could effectively cost out every aspect of the wages, pensions and ancillary costs. This package of demands which we presented to the management was known as “blessing the table”.
The management took this detailed proposal (the one we submitted to GM was around 120 pages long plus tables) and considered it for about four days before our next meeting. They then responded with a document of their own. This initial stage of documentation allowed us to know the amount of money that would likely be on the table for the collective agreement. The amount could be pushed up but not by much. By the end of that day both the unions and the management knew pretty well what the size of the package would be. The rest of the negotiations revolved around maximising the individual parts of the agreement to get the best value out of the funds available for the package.
In every agreement there are costs and “roll-up” costs. That is there are many parts of the agreement which derive from the basic wage cost. Overtime is a multiple of the wage cost; holidays and pensions are related to the wage rate; coffee breaks are costed as a factor of the wage rate; etc. So, as the basic wage rate changed so did the “roll-up” costs. The union attempted to maximise the overall package by adjusting the “roll-up” costs. How else can one decide between the costs of an additional five-minute coffee break with the cost of an extra day of holiday except by costing out the effect of these changes based on the overall cost of these changes during the life of the contract?
For some items the figures agreed were stated as a dollar figure rather than a direct wage cost. Unemployment benefits agreed by the company were set as a dollar figure. Since the state is obliged to pay the unemployment benefit to all workers on a fixed amount per month it was in the company’s interests to lobby that State Legislature with us for higher state contributions for all workers (as this lowered to costs for the company). Wherever there were strong unions the states in which they operated paid the highest rates of unemployment compensation in the country. Funeral costs were another proviso. Wherever there were strong unions these social costs (like state funeral benefits) tended to rise as the companies sought to reduce their share of the cost.
That was the workers’ share of the bargain. The company benefitted as well. In these agreements was a ‘no-strike’ clause which allowed the companies to get on with their business as long as they adhered to the terms of the agreement. Disputes were settled by using the most important part of the contract, the grievance procedure. That is a system where if a worker can show that his contractual rights have been infringed by management, he can file a grievance. A procedure is set up for the resolution of these grievances in a hierarchical structure. If the grievance isn't settled between the management and the worker, the union shop steward can take that grievance to the next stage and discuss the grievance with his counterpart in the management. If it isn't settled at that level, the grievance can be taken by the union at the plant to the industrial relations department (Human Resources) for settlement. Beyond that a third-party neutral, an arbitrator, can be brought in who hears the case and makes final judgement on the merits of the case and issues an award in favour of the victor. The important part of this process is that it all takes place while work continues at the plant. There is no strike or shutdown of the plant while the grievance is being heard. The workers know that they are getting a democratic hearing based on the written contract; a copy of which he and the union and managers have. The arbitrator decides the case on the 'four-corners' of the agreement.
This is of immense value to an employer. He knows, to the 10th of a cent per hour for every employee what his costs will be; there is continuous production at the plant; there are two sides seeking to solve disputes without interference in the work process and a system in place which sets the rules for hiring, firing, promotion and layoffs. With democracy comes stability and continuity; of immense value to both sides.
One of the key aspects of this agreement is the notion of seniority. The basis for rewarding seniority is not just fairness of the first hired being the last fired; it derives from the notion that the company is earning more from the labour of the employee than he is paying the employee. The worker has an investment of the profit garnered from his work in the success of the company. He has added value which means his stake and contribution to the company is more than a new hire or someone who has worked there for a shorter time. That is why seniority is important; both for the security of the job and the priority for promotion or advancement.
There are additional benefits agreed within the contract; benefits like a cost-of-living adjustment (COLA) which raises compensation across the board based on the economic factors of the economy. It is added on an agreed period to keep the purchasing power of the worker to the level which applied at the contract’s inception. That allows for agreeing three-year agreements to be negotiated. There are several other agreements on pensions, health and dental benefits, extended leave provisions and profit-sharing. Occasionally there are parking rules at the plant agreed. The final contract includes many, if not all, of these.
The most serious problems arose when the company, itself, was failing to remain economically viable. There were several companies (Chrysler, Studebaker, American Motors and several parts manufacturers) which were hit by a period of economic decline. After much debate the UAW agreed to financially assist the Chrysler Corporation. It was 1979 and the nation was in deep recession. Chrysler Corp. was in trouble as the Big 3 began facing problems in the car industry that would plague the industry for decades to come. And as the number three automaker of the three, Chrysler was the most vulnerable automaker financially. The government introduced a bill in December 1979 with the provision that Chrysler got a private loan for $1.5 billion with the federal government as co-signer and got another $2 billion in leverage, including wage cuts and layoffs, which the UAW agreed to because of the extreme circumstances. Three years later Chrysler paid off the loans. The UAW helped save Chrysler. It happened again in 2008 when GM and Chrysler were both bailed out by the government with the assistance of the UAW.
While this served to preserve the auto companies it also promoted a system in which the union made compromises as its part of the bargain. It allowed a creation of “two-tier” workers in which new hires did not automatically receive the ‘rate for the job’. COLA adjustments were not made at the full rate. Medical and pension benefits were diluted or removed. Retiree benefits were slashed and removed and whole sections of the workforce were treated as ‘temporary’ and thus without full union protection. It also allowed some of the top union officials to act improperly in the administration of the union by receiving private benefits from the auto companies. There was a showdown at the last union congress a new group of leaders came to power, dedicated to removing the continuing effects of the union’s sacrifices for an economy and industry which was no longer failing. The current strike is about rectifying these anomalies. The union has issued its demands of this negotiation. They speak for themselves.
Here are the Current UAW Demands:
ELIMINATE TIERS – It’s wrong to make any worker second class. We can’t allow it any longer in the UAW. The Teamsters ended tiers at UPS. We’re going to end tiers at the Big Three.
SUBSTANTIAL WAGE INCREASES – Yes, we’re demanding double-digit pay raises. Big Three CEOs saw their pay spike 40 percent on average over the last four years. We know our members are worth the same and more.
RESTORE COLA – It’s Cost of Living Adjustments (COLA) that made sure working-class communities thrived for decades. Taking that away hammered us and our hometowns. It must be restored.
DEFINED BENEFIT PENSION FOR ALL WORKERS – All workers deserve the retirement security that UAW members had for generations.
RE-ESTABLISH RETIREE MEDICAL BENEFITS – That’s just as essential as a solid pension.
RIGHT TO STRIKE OVER PLANT CLOSURES – The Big Three have closed 65 plants over the last 20 years. That’s been as devastating for our hometowns as it has been for us. We have to have the right to defend our communities from the corporate greed that’s killing so many cities and towns.
WORKING FAMILY PROTECTION PROGRAM – It’s a program that keeps UAW members on the job. If companies try to flee our hometowns, they’ll have to pay UAW members to do community-service work. Companies can still make a healthy profit and it’ll keep our communities healthy, too.
END ABUSE OF TEMP WORKERS – We are going to end the abuse of temps. Our fight at the Big Three is a fight for every worker.
MORE PAID TIME OFF TO BE WITH FAMILIES – Our members are working 60, 70, even 80 hours a week just to make ends meet. That’s not living. It’s barely surviving, and it needs to stop.
SIGNIFICANTLY INCREASE RETIREE PAY – We owe our retirees everything. They built these companies, and they built our union. We will not forget them in these negotiations.
When I worked at the UAW our headquarters at 8000 East Jefferson Avenue in Detroit was called ‘Solidarity House’. It recognised the need for solidarity among the workers as a key building block in creating a democracy in the workplace. The neo-liberal cant which accompanies globalisation has seen that the weakness of the labour movements across the world has been the missing elements of Solidarity which gives workingmen and women their power to change things. Until this Solidarity can be renewed and expanded casualization, sub-contracting and division will destroy the labour movements. This would be a pity and a waste of all the efforts made to get labour this far.
Source: Ocnus.net 2022